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The city of St. Paul Park may be forced to dip into ample fund reserves to balance its 2012 budget, the city's administrator told City Council members during preliminary budget discussions.

With a projected deficit of around $36,000 in next year's budget, City Administrator Kevin Walsh said the loss of nearly half of the state aid the city was set to receive has put officials in the position of needing to both raise property taxes and raid its budget reserves to balance St. Paul Park's 2012 budget.

On top of declining home values -- and, in turn, falling property tax revenues -- state lawmakers have continued to slash Local Government Aid dollars to Minnesota cities. St. Paul Park had been due to receive roughly $270,000 in LGA in 2012. Instead, Walsh said, the city is expecting to get around $140,000.

That, he told council members, has had an impact on St. Paul Park taxpayers.

"Our property tax levy has increased significantly over the last few years" as LGA and other revenues have fallen, Walsh said.

Based on the preliminary budget outlook Walsh delivered to the City Council last week, that trend won't stop next year. The city's preliminary budget calls for a 7.4 percent hike in the city's property tax. How that increase impacts individual homeowners depends on how their property value has changed since the previous year.

Walsh said the city's budget deficit is expected to grow in coming years due to personnel costs. But, he said he expects St. Paul Park's healthy reserve fund balance to help city officials manage.

"We've done a good job of expense control," councilmember Jeff Swenson said. "It's that the revenue side doesn't look the same way it did a few years ago."